Core sector clocks 7-month high growth of 6.7% in June

NEW DELHI: Buoyed by an expansion in output of cement, refinery and coal, infrastructure industries grew to a seven-month high of 6.7% in June, official data showed on Tuesday.

Core sector had grown 4.3% in May 2018 and 1% in June last year. The eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, constitute 40.27% of the total industrial production.

The higher growth could provide a lift to industrial production that had slowed to seven-month low of 3.2% in May.

“The pickup in the growth of the core sector industries, automobile production and non-oil merchandise exports is likely to boost the pace of industrial expansion to around 6% in June, led by manufacturing and electricity,” said Aditi Nayar, principal economist at ICRA.

Madan Sabnavis, chief economist at CARE Ratings attributed the growth to a low base effect as the goods and services tax was rolled out on July 1 last year and overall industrial activity was slow.

Sabnavis expects factory output to rise above 5% for June. The core sector growth for May 2018 was revised up to 4.3% from 3.6% and is also expected to lift the overall IIP growth for that month as well from 3.2% estimated initially.